Don't get all bent out of shape because I gave a history lesson on policy. I didn't think you did know the history because if you did, I can't see how anyone would logically conclude that the government just needs a bit more power and authority here and there to do it right this time. I brought up healthcare because the current debacle comes from politicians believing they knew better than the consumer and thus the market as to how to regulate and distribute it. You don't think markets regulate themselves, yet you have faith in politicians and regulatory agencies who are corruptible and flawed and consistently regulate in favor of special interests and not the country as a whole. Have you ever listened to Milton Friedman on it? He frames the debate quite well. Keynes oversimplified the economy in a simple equation to try and make economics more scientifically sound with formulas. CPI and GDP are not very accurate in ways often perpetuated. Government spending surely increases GDP but what no one defending government spending brings up is that the resources the government spent came from somewhere and it is merely moving money from one sector to another, usually politically connected.
Your financial leveraging anecdote further supports a freer market than you care to see. When an outside entity declares ratio X is acceptable that makes the consumer/depositor less involved and given a false sense of security. Does a depositor really give a shit what a bank does with their money? If they did they would move there money elsewhere, they don't care what happens to their deposits because it is FDIC insured. Now I am not against insurance on deposits, but having the government back it creates moral hazard. Whereas private insurance companies could compete with reputations, standards, and giving depositors more options and giving an added check on bank deposits This could all be summarized for the laymen as well. One thing I applaud OWS for encouraging is moving your money out of the major banks involved and putting it into Federal credit unions or local banks. Consumers voting with the wallets, I like a lot.
The same thing goes for other types of government created moral hazard. Typically coastal regions are more prone to flooding, insurance premiums should be extremely expensive if offered at all, if they aren't available, the market is saying don't build next to the fucking water. Instead the government comes in and subsidizes the insurance, and typically rich people benefit because they can afford the expensive real estate near the coasts. To add insult to injury, when a disaster does occur, the rest of the states have to bail out the other states who decided to say fuck it lets ask the Feds for grants, while the state should have handled their internal affairs themselves (fortifying walls/levies, evacuation procedures etc..)
Fema is a great misapplication of resources. Also, there were restrictions on "price gouging" during Katrina. there are numerous stories of people from other states offering to sell generators and other goods to people who wanted them and were willing to pay high premiums.
MYTH: Price-Gouging Is Bad - ABC News
John Shepperson was one of the "gougers" authorities arrested. Shepperson and his family live in Kentucky. They watched news reports about Katrina and learned that people desperately needed things.
Shepperson thought he could help and make some money, too, so he bought 19 generators. He and his family then rented a U-Haul and drove 600 miles to an area of Mississippi that was left without power in the wake of the hurricane.
He offered to sell his generators for twice what he had paid for them, and people were eager to buy. Police confiscated his generators, though, and Shepperson was jailed for four days for price-gouging. His generators are still in police custody.
So did the public benefit? Here's the real question: What is the best way to deal with shortages after a natural disaster?
"Any time there is a natural disaster, or a hurricane, an earthquake, the price of the things that people desperately want to have -- batteries, flashlights, generators, water or milk -- they go up. Or they disappear," said economist Russ Roberts. If sellers don't raise prices, supplies vanish. Anxious buyers line up and often buy more than they need, just in case. Those not at the front of the line may get nothing.
"More people want to buy it than there is stuff available. … What do you do? How do you solve that problem? And how do you find out who should get those scarce items," Roberts asked.
The answer is you allow people to raise prices -- even to "gouge" -- because only people who REALLY need them will cough up the money. Gouging also encourages greedy entrepreneurs to rush in with much-needed goods, or to look for more supplies.
The politicians' typical solution is anti-gouging laws or capping prices. During the 1970s gas crisis, that's what the government did. What happened then?
"It was a disaster. It led to long lines, and you couldn't get gasoline," Roberts said.
Economics 101, demand is high price is raised to reach equilibrium in supply and vice versa. The government is essentially saying, "no, we want taxes paid to us from other states to subsidize you. we want to declare martial law and take your only means to self defense during a disaster." The government is not there to help you despite how good the intentions may seem, if you are an American you are not free, or free in the sense that you are led to believe. You are not allowed to freely associate, enter voluntary trade agreements with other consenting and willing adults, and you do not own your labor. If you are rich you get lighter sentences, if you are poor and minority especially you get hit harder with drug offenses. However, most of the reason people can gamble with leveraged money is because the FED Creates the cheap credit, allowing for such a wide ratio to be feasible which further inflates speculative bubbles. End the FED, its robbing Americans blind and most people don't even realize.